A premium that doesn’t burn a hole in your pocket

If Arogya Sanjeevani proves popular, insurers may well begin offering instalment options on other health policies

As easy as 1,2,3…or 12 monthly instalments, if you wish. We are talking about the possible future of your health insurance premiums, where you may opt to pay in instalments through the year.

The standardised health insurance policy — Arogya Sanjeevani — was designed by the Insurance Regulatory and Development Authority with many interesting features. Every general insurance or health insurance company is mandated to offer it from April 1, 2020.

One of them is the long-felt need for instalment payment of premium, as opposed to only annual payments. This enables us as an insured to match our premium payment to cash inflows. It is especially of great value in times like the present pandemic, when earnings and even jobs are at stake, and one would like to stagger expenses.

In Arogya Sanjeevani, the policyholder can opt for half-yearly, quarterly or monthly payment of premium and also automate the payments using the auto-debit or ECS mode. If this proves popular, one can see insurers offering this option on other health policies.

Options for instalment premiums in Arogya Sanjeevani operate with some conditions, similar to annual premium payments we are familiar with.

Grace period

There is a grace period of 15 days for paying the instalment premium. The caveat, however, is that during the period between due date of premium and actual receipt of premium by the insurance company, you will be uncovered.

But the good thing is that, even if you have used your grace period to the fullest, your benefits of waiting period for pre-existing conditions, and specific waiting period for treatment of specified conditions are fully protected. Neither will there be any interest charges if the instalment premium is not paid on the due date.

However, if you fail to pay within the grace period, your policy will lapse and, along with it, any accrued benefits such as waiting period or cumulative bonuses. Your choice will be only to start another hospitalisation policy, afresh.

Most of us are used to making monthly payments of all kinds including rent, society dues, EMIs on home loans, school fees, phone, broadband, electricity and a host of other utility bills.

When it comes to investments, life insurance premiums, systematic investment plans for mutual funds and even monthly public provident fund or recurring deposit payments are very common. So, instalment premium for health insurance can smoothly be incorporated into the payments list once the salary comes in. Once insurers start offering it on various policies.

The catch is, what if you forget? The cost of that in the case of health insurance will be higher than in the case of other financial investments.

The freedom has now been given and it is up to us to remember that with freedom comes significant responsibility. There is no point in forgetting to pay your instalment premium and losing health insurance coverage.

(The writer is a business journalist specialising in insurance & corporate history)


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